Coinbase takes a shot at Tether, encourages users to switch to USDC

United States-based cryptocurrency change Coinbase has requested its clients to convert their Tether-issued USDT (USDT) stablecoin to USD Coin (USDC), a USD-pegged stablecoin issued by Circle and co-founded by Coinbase in 2018.

The cryptocurrency change steered that USDC is a way more safe different within the wake of the FTX collapse saga and has additionally exempted any payment on the conversion of USDT to USDC on its platform. The agency stated:

“We consider that USD Coin (USDC) is a trusted and respected stablecoin, so we’re making it extra frictionless to switch: beginning in the present day, we’re waiving charges for international retail clients to convert USDT to USDC.”

Stablecoins began out as an onboarding software for the crypto exchanges within the early days of crypto, however in the present day they’ve change into a key market participant and liquidity supply. However, there has all the time been some type of scrutiny round their reserves backing these stablecoins. A stablecoin, by definition, have to be backed by 1 USD or equal.

The reserve debate intensified within the aftermath of FTX collapse as many companies with publicity to the contaminated change and its sister firm Alameda Research went bankrupt. There was one other allegation about Binance CEO Changepeng Zhao buying and selling barbs with former FTX CEO Sam Bankman-Fried and accusing him of attempting to depeg USDT.

Tether revealed its newest quarterly attestation on Nov. 10, simply a day earlier than the change filed for chapter. The report famous that 82% of Tether’s reserves are held in money, money equivalents and different short-term deposits as of Sept. 30, 2022.

Coinbase additionally pressured that USDC is 100% backed by “money and short-dated U.S. treasuries held in U.S. regulated monetary establishments,” and it’s all the time redeemable 1:1 for U.S. {dollars}.

Related: Circle co-founder says converged greenback books on Binance can be good for USDC

Apart from the controversy over reserve audits, there may be a rising “stablecoin struggle” amongst crypto exchanges as properly. Coinbase’s request to convert USDT to USDC comes simply a couple of months after Binance, one other international participant, reduce help for USDC main to a drop of $3 billion available in the market cap of the Coinbase co-founded stablecoin.

Tether-issued USDT is the most important stablecoin by market share with a market cap of $65 billion, USDC presently sits at a $42 billion market capitalization however has quickly eaten into USDT’s market share. Binance’s stablecoin, BUSD, presently has a market cap of $22 billion.

Tether didn’t reply to Cointelegraph’s requests for feedback at press time.